Larry D. and Sheryl J. Svoboda - Page 6

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          expense pursuant to section 162, and claim a credit equal to                
          $5,000 pursuant to sections 38 and 44.  The deduction of $5,250             
          comprised the $2,500 cash paid plus the excess of the promotional           
          services income over the claimed credit amount--$7,750 minus                
          $5,000, which equals $2,750.  AdaCom issued a Form 1099-MISC, in            
          the amount of $7,750 to each program subscriber.                            
               None of the people referred by the program subscribers were            
          required to subscribe to the program in order for the referring             
          program subscriber to obtain credit towards the purchase price of           
          the program.                                                                
          Petitioners’ Tax Return                                                     
               During the 2000 tax year, petitioner Larry D. Svoboda was              
          employed full time as a computer programmer, and petitioner                 
          Sheryl J. Svoboda was employed part time as a teacher.  For 2000,           
          petitioners filed a Schedule C, Profit or Loss From Business,               
          claiming a business of “Sheryls Tupperware” and a Schedule C for            
          a second business of “Worldwide Products”.  For 2001, petitioners           
          also filed a Schedule C for “Sheryls Tupperware” but did not file           
          a Schedule C for “Worldwide Products”.  The business name listed            
          on the AdaCom promotional services agreement, signed by                     
          petitioner Sheryl Svoboda, is “Lunar Light Enterprises”, for                
          which no Schedule C was filed for 2000 or 2001.                             









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Last modified: May 25, 2011